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Galaxy signs offtake agreement for battery production

PERTH (miningweekly.com) - Lithium producer Galaxy Resources has signed an offtake framework agreement with 13 Chinese electric bicycle manufacturers for the full production from its proposed lithium-ion battery project, in China.

MD Iggy Tan said on Wednesday that the level of interest in the batteries from major e-bike producers underpinned the company’s plans to add a highly automated battery manufacturing plant to its downstream portfolio.

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“The completion and start of the Jiangsu lithium carbonate plant is our first priority, nonetheless, these offtake framework agreements are important preparatory work for our proposed pipeline battery project,” Tan said.

He noted that the five-year framework agreements included a minimum purchase condition of between 15 000 and 40 000 battery packs a year. Under the agreement, battery prices would be set on a quarterly basis, and subject to market price adjustments.

Tan said that production from Galaxy’s proposed battery project was expected to reach 350 000 battery packs a year, but could be tripled in capacity, subject to future demand.

“The offtake agreements are subject to the Galaxy board’s final investment approval for the battery project, and will not consider making this decision until the Jiangsu lithium carbonate plant is completed,” he added.

China currently produces around 27-million e-bikes a year, and was gradually replacing the bikes’ heavy lead acid batteries with lighter lithium-ion battery technology.

Galaxy completed the feasibility study for the battery project in 2010, and found that producing 350 000 e-bike batteries a year would generate an annual revenue of around A$68-million.

Galaxy owns and operates the Mount Cattline spodumene mine, which produced some 8 916 t during July. The company’s Jiangsu lithium carbonate plant would have a design capacity of some 17 000 t/y of lithium carbonate, making it one of the largest plant in China.